5. Do We, Cheatum, and How each receive a $7,000 salary, as well as 15 percent i

Question

5. Do We, Cheatum, and How each receive a $7,000 salary, as well as 15 percent interest on their respective average investments of $20,000, $10,000, and $40,000 If they share much would How's account increase or decrease (indicate a decrease by placing parentheses around the amount), assuming (a) net income of $40,500 income of $27,000, and (c) net loss of $31,500. In addition, calculate (d) How's share of a $37,000 net income if income and loss distributions were based instead solely on the ratio of average capital investments. remaining income and losses in a 4:3:2 ratio, respectively, by how , (b) net

Explanation / Answer

a) Net Income is $40500.

Capital A/c :-

b) Net Income is $27000

Capital A/c :-

c) Net Loss is $31500.

Capital A/c :-

d) Net Income is $37000, Distribute in Ratio of Average Capital Investment.

Capital A/c :-

Particulars DoWe Cheatum How Particulars DoWe Cheatum How To Balance End 48000 32000 62000 By Balance Beginning 20000 10000 40000 By Salary 7000 7000 7000 By Interest@15% 3000 1500 6000 By Net Income(4:3:2) 18000 13500 9000 Total 48000 32000 62000 Total 48000 32000 62000

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